A century of exploitation; no sign of compensation, Peru

Wednesday, April 10, 2019

Finance Guide Belgium

The problem

Perhaps one of the worst cases of mining exploitation is in the province of Espinar, Peru, where mining activity has been taking place since 1917.[1] Local Indigenous communities have suffered a variety of serious health and environmental problems as a result. They are among the many Indigenous communities across Peru that find themselves in a precarious health situation due to pollution from mining.[2]

Studies show that the main sources of water in the seven worst-affected communities of Espinar are contaminated with heavy metals and other chemical substances which pose a major risk to health.[3] Blood and urine samples from hundreds of people revealed traces of arsenic, mercury, cadmium and lead, which in many cases exceeded safe limits as set by the World Health Organization (WHO).[4] Specialists have referred to the situation in Espinar as a ticking time-bomb, as long-term exposure is likely to lead to cancer and kidney failure. These are in fact the main cause of death in Espinar, which, according to experts, is unusual and points to a possible link with the mining activities.[5] Unfortunately, no state or company authority officially recognizes the link between these health issues and the mining activities. As a result, the people affected don’t receive any form of compensation; nor do they have access to proper healthcare.[6]

Glencore, the world’s largest mining company by revenue, exploits the open pit mine Antapaccay in Espinar.[7] For years there have been tensions between the mine owners and the local population. In 2012 this resulted in a mass protest, in which two civilians were killed and dozens injured. Supported by national and international organizations, local communities from Espinar are currently conducting a lawsuit at the Supreme Court of London.[8]

Glencore states that it supports and endorses the UN Guiding Principles for Business and Human Rights, the Extractive Industries Transparency Initiative (EITI) 38, the Voluntary Principles on Security and Human Rights, and the International Council on Mining and Metals (ICMM) Principles. The company also refers to various risk management systems.[9] Despite the integration of these standards into its policy, Glencore’s activities in Peru are far from setting a good example in terms of corporate social responsibility. The company must take responsibility for environmental pollution and human rights violations in its mining activities in Espinar.

As revealed by the 2017 study on Belgian investments in controversial metal mining[10] conducted by FFG Belgium and its partner coalition 11.11.11, Glencore received financing (from 2011–2016) from four Belgian banks, namely BNP Paribas, Deutsche Bank, ING Group and KBC Group, linking these banks to controversial mining exploitation.

Influencing activities

FFG Belgium, along with 11.11.11, conducted intensive studies on the effects of mining on communities in Peru. The launch of the report in 2017 sparked public outrage towards the banks investing in controversial mining. Belgian Minister of Finance Johan Van Overtveldt was urged to question BNP Paribas, of which the Belgian state is a major shareholder.

Change in financial institutions

In the ensuing discussions and correspondence, the banks put forward a series of interesting arguments against divestment from controversial mining – including that mining companies are ‘too diverse to exclude’ and that many other companies are dependent on them. They said that divestment would put a hold on the dialogue and banks would lose the potential to influence the companies. It was even suggested that there is no such thing as sustainable mining.

These arguments clearly illustrate how the problem of controversial mining is a structural one. The fact that these companies are diverse should not be an argument for investing in them. By supporting Glencore as a whole, banks are also supporting its controversial activities. Dialogue is necessary, but should have a clear set goal. It is unlikely that companies will change their policies if they do not feel any pressure from their investors. Moreover, the dialogue can continue after divestment takes place. Banks need to give a clear signal to controversial companies that they do not agree with their practices. They can do that in the first place by including so-called ‘red lines’ in their policies, pointing out which practices are unacceptable to them.[11]

Change in companies invested in/change in social actors

In a 2017 response letter to Business & Human Rights Resource Centre, Glencore stated: ‘We strongly reject the allegations of environmental pollution being linked to our Tintaya-Antapaccay operation. All of our sites operate to industry-leading environmental standards and to our stringent sustainable development policies and standards. Our operations comply in full with or exceed all applicable environmental and social regulations. Our operations undertake environmental monitoring on a regular basis and are subject to both external and internal audits to evaluate the site’s environmental performance.’[12]

Impact on the ground

On 22 August 2018, CooperAcción – a Peruvian CSO that promotes knowledge and enables people to exercise their social, environmental, political, cultural and economic rights – released a statement explaining that staff from the Yuari Health Centre and other health centres in Espinar had begun delivering the results of tests for heavy metals in blood and urine as evidence in a new study. The document noted that a proposal for national policy guides to respond to the problems of the population exposed to heavy metals and other chemical substances, led by the health sector, is currently being considered, adding that ‘From this, we observe in the competent authorities a political will to do things differently.’[13] While there is a very long way to go before there is justice for the affected populations of Espinar, these are some steps in the right direction.